A state-funded increase in wages for the frontline workers begins Saturday, but companies say insurance providers are withholding the money. 

On Saturday, Adria Powell, president of the Bronx-based Cooperative Home Care Associates, will finally get to do something home health advocates have long been fighting for: raise workers’ pay above minimum wage, with the support of state funding.

But how those state dollars will get to her company, New York’s largest home health agency owned by its workers, is something that sets her into a spiral of anxiety so severe that her doctor commented on her rapid pulse rate at a regular visit on Thursday. “Well, we have a problem in home care,” she said, as her pulse rate rose to 120 beats per minute.

As of Oct. 1, home health aides across New York state making minimum wage will see a $2 wage increase this year and another $1 next year, following a $7.7 billion investment by Gov. Kathy Hochul in the fiscal year 2023 budget. But owners of the companies that employ home health workers, including Powell, say they aren’t getting reimbursed fully from the insurance companies managing the funding—or that the companies haven’t responded to their requests for rate amendments.

In New York, state and federal dollars to pay for home health services trickle through managed care organizations—private insurance companies—who negotiate reimbursement rates with individual home health companies. The home health companies then employ and pay workers to attend to patients in their homes or other facilities.

The managed care companies consistently maintain that their rates are proprietary, or confidential, lawyers representing workers in the industry say, leaving for little transparency in one of the country’s most rapidly growing industries.

Advocates have urged the state’s Department of Health to regulate how the managed care organizations, which are for-profit companies, distribute the funding. The Fair Pay for Home Care, a proposed state bill calling for a raise in wages, included wording requiring the Department of Health to “develop reporting requirements to ensure plans and providers allocate this funding for the purpose of increasing compensation for health care workers.” But the legislation failed to pass during the state legislature’s last session, and although Hochul included the $3 bump over two years in the budget, that language giving the DOH oversight on the rates was dropped.

“The state indicated that it would be providing funds to the plans but that ultimately the determination of what the rates would be, and how all that would be calculated will be subject to a negotiation between the plans and the providers,” said Al Cardillo, president of the Home Care Association of New York State, which represents hundreds of home health companies across the state. “We said, that’s really not a very fair position to put anybody in because this is a state mandate.”

The state’s Department of Health held two webinars for providers and managed care plans about the change and informed plans to coordinate with the provider network to update their contracts accordingly. “The Department will keep reiterating its previously released guidance with health plans to ensure statutory compliance,” a DOH spokesperson said in an email, noting that federal regulations prohibit the managed care companies from pocketing the extra dollars.

But some are unconvinced that existing enforcement is enough to prevent that from happening. “The Department of Health says that, but those plans make huge profits,” Powell said.

She has contracts with eight managed care organizations—two of which had not yet given her updated reimbursement rates just two days before the new wages go into effect. Of the other six, only one has provided the full amount of funding from the state to pay the $2 wage increase plus associated payroll taxes and other costs. One has provided only a 50 cent per hour increase in reimbursement, she said. Another amended contract shared with City Limits, with the company names redacted, shows an increase of only 20 cents an hour.

The New York State Association of Health Care Providers (HCP) surveyed its home care agencies this week and reported that 87 percent had not yet received a rate amendment, and 61 percent  were actually offered decreased rates.

“And more disturbing, we have learned of communications that indicate if an agency does not accept the offered rate, the plan will begin to disenroll members from that agency leading to disruption in the care and routines of patients,” said Kathy Febraio, president of HCP.

The New York Health Plan Association, which represents more than two dozen managed care health plans across the state, attributed the mess in part to a “lack of clarity in the guidance and the need for updated rate packages so plans know the amount of funds available to pay providers.”

“Unfortunately, in some cases the funding made available to health plans is not enough to support increases of the magnitude that providers are seeking, while in others some providers are not seeking the funds for workers but rather for profit,” the group’s CEO, Eric Linzer, claimed in a statement.               

Wages in the home health industry are notoriously low: the median annual wage in New York City for home health and personal care aides is just over $32,000, according to the Department of Labor. Nearly half of the workforce—which is mostly immigrants and women of color—are on public assistance, reports PHI.

“The wage adjustment was not only probably 20 years overdue, the wage adjustment doesn’t even hit the mark of what it needs to hit in order to address the competitive and meaningful compensation in the field,” said Cardillo.

Advocates have long fought to improve wages and workplace conditions for this workforce that is consistently overlooked as frontline workers. When the COVID-19 vaccine first became available to medical professionals in December 2020, home health workers were left out of the list of priority workers eligible for the shot for nearly a month, even though they were still performing their jobs through the pandemic in non-clinical settings. They were also left out of a retention bonus program Gov. Hochul offered to frontline workers starting in August, which offers bonuses of up to $3,000 for healthcare workers who are making less than $125,000 a year.

“Aides around the state are hurt, bewildered and offended at the fact that they spent probably the most frontline time with the patients and they were omitted from the bonus,” said Cardillo.

As for the wage increases that take effect Saturday, if she doesn’t receive enough reimbursement from the insurance companies to cover the boost, Powell is concerned about the long-term impact the change will have on the business—and patient care. It may also ultimately impact the workers, who are already receiving messages about reduced overtime pay, a measure Powell says she will have to take as well.

“We’re still going to provide services to the clients, it could mean that we need to stop working with certain plans. If the 50 cent [rate] doesn’t change, then it means I can’t keep those cases long term,” she said. “It’ll be disruptive to the continuity of care for the clients.”

Liz Donovan is a Report for America corps member.